Expediting Growth

It runs two Fish Markets locally and has three more scheduled to open this year in Sandestin, Fla., Jacksonville, Fla., and Stamford, Conn.

Mitchell said he has no intention of selling the non-Fish Market restaurants, which range in style from casual Americana at Cap City Diner to Chinese at Molly Woo's Asian Bistro to fine dining at M.

He said the Fish Markets and his eight other restaurant nameplates are healthy and profitable.

Fish Markets average $4 million in annual sales and same-store sales rose 3 percent for 2006, according to the company.

"This is a strategic choice," he said. "We're not in distress. We're not trying to get out from under a rock."

Driving the decision to pursue a Fish Market sale are limits on capital resources and manpower within the company. Mitchell said he wants to see the Fish Markets continue to grow, but he also wants to expand other brands and have the ability to develop more new restaurants. He singled out Cameron's Steakhouse, Mitchell's Ocean Club, the new Marcella's Italian café, and the Rusty Bucket Corner Tavern - managed but only part-owned by Cameron Mitchell Restaurants - as restaurants he could expand with more capital.

The operating model of those restaurants are good and the concepts resonate with guests, he said. Besides the Fish Markets, Cameron's Steakhouse - called Mitchell's Steakhouse in Central Ohio - and Martini Italian Bistro are the only nameplates with a presence outside Central Ohio. The company operates one Martini bistro in Louisville, Ky., and steakhouses outside Detroit and Milwaukee.

Mitchell said he doesn't know if the whole Fish Market chain or just a stake in it will be sold, or if everything will stay the same. The process is expected to take several months and Mitchell said he expects to find interested buyers.

"If we don't find the right partner, we won't do anything," he said.

If no sale occurs, Mitchell said he plans to continue opening three to four new Fish Markets a year. But with the right investor, the chain could grow by between six and 10 restaurants annually.

Mitchell said the company has been approached by potential buyers before, but refuted rumors that one of those was Orlando-based Darden Restaurants Inc., owners of Red Lobster and the Olive Garden.

"It is flattering if they're interested," he said, "but we've never had any contact with Darden."

Equity Explosion

Private equity firms in recent years have set their sights on restaurant companies as vehicles for investment and growth, including in Central Ohio. Dublin-based Wendy's International Inc. announced in April that it was investigating strategic options for the company, including a potential sale to another company or a private equity firm.

A better comparison for the Fish Markets would be Columbus-based Bravo Development Inc., which last year sold an 80 percent stake in its then-52-unit chain for between $150 million and $200 million to Bruckmann Rosser Sherrill & Co. and Castle Harlan Inc., two New York private equity firms.

There is an easy explanation for the increased interest in restaurants from the private equity community, said Hudson Riehle, the National Restaurant Association's senior vice president of research. The simple reason is restaurants have become a reliable investment, he said.

Industrywide sales are expected to hit a record $537 billion this year, and consumers are allocating an average of 48 percent of their food spending on restaurants.

In 1955, the first year the Restaurant Association tracked the figure, customers spent only 25 percent of their food spending dining out.

"The investor community has realized sales are less cyclical than they've historically been," he said.

Restaurant revenues have increased for 16 consecutive years, including during the 2001 recession, Riehle said.

If Mitchell sells the Fish Markets, it will put the chain on a list of well-known companies making or exploring the leap into private equity in recent months, albeit with varied results.

One to watch is publicly traded steakhouse operator Smith & Wollensky Restaurant Group Inc., based in New York City. The company, like the Fish Markets, shoots for the white table cloth crowd, and is considering a $90 million offer for the 13-unit chain from Patina Restaurant Group LLC and private-equity firm Bunker Hill Capital LP.